Frankfurt – Lufthansa
chairman and CEO Carsten Spohr expects other airlines will follow the company's
distribution cost charge flight path.
In a speech at the Global Business Travel Association’s
European conference in Frankfurt, Spohr's tone in defending the controversial
€16 fee straddled
apologetic and determined. “Things did not go perfectly in terms of
communication. The results show things have not changed to the degree we
believe that we went the wrong way.”
Lufthansa reported an 83 percent load factor for October,
the highest ever seen for the month, Spohr said. While “some customers in some
channels” were down, the carrier compensated through other channels, especially
direct booking, which rose about 20 percent he said.
“This is the future of our industry," he said. "It’s
a question of when times open up [for global distribution system negotiations] for other airlines. We’ll
see this as a new standard.”
Spohr apologized that its direct booking interface remains a
work in progress but said the timing of its GDS contracts
made it necessary for Lufthansa to introduce the fee when it did.
He said leisure travel will become a larger focus, as the potential
to grow corporate demand is limited, but he added, “No airline in the world is
more dependent on corporate customers than we are.”
Other topics he hit during the presentation:
Labor issues: As
Spohr spoke, a good portion of the day’s flights had been canceled owing to the
fifth day of a strike by Lufthansa’s cabin crew union, one of several labor-related
work stoppages the carrier has seen this year. Even so, Lufthansa will not bend
on cost-cutting measures related to labor, he said, calling existing labor norms
relics from a more regulated time. “Historically, unions warned us about
strikes, and we backed off,” Spohr said. “That’s like taking an aspirin. It
doesn’t heal; it just takes away the pain.” While he hoped the strikes would
not last long, “it will take as long as it needs,” he said.
Lufthansa announced a joint venture with Singapore Airlines on key routes, as
well as codeshare expansions and further schedule coordination. Per the
partnership, flights between Singapore and each Munich, Frankfurt and Zurich
will operate under revenue-sharing agreements. Singapore will add a flight
between Singapore and Düsseldorf in July 2016 that will be covered under the same
arrangement. Lufthansa also is nearing a JV agreement with a carrier in China,
Spohr said. Fellow Star Alliance member Air China seems the most obvious
The carrier will make Lufthansa, Swiss and Austrian Airlines operations
more seamless across its four hubs. “There surely is a reason for having
Austrian and Swiss in terms of brand, uniform and maybe even catering, but you
don’t need four different restrictions for hand baggage,” he said. “We want to
make sure the way people book across the four hubs, travel across our four hubs
and irregularity management becomes a more homogenous experience.” That also means
more sales cooperation, he said.
airline industry, both in Europe and globally, is ripe for consolidation, Spohr
said. While the five largest U.S. airlines control more than 90 percent of the
country’s market share, Europe's top five represent only 45 percent of that continent's
marketshare. The largest airlines, Lufthansa and American Airlines, control
only about 3 percent of global market share each, he said.
In particular, the nine major low-cost carriers in Europe
likely will consolidate, he said, and Lufthansa could leverage that to grow its
own LCC, Eurowings. “There’s no way all nine of us can make it,” Spohr said.
“There will be consolidation in the next downturn, and that’s just around the
corner. Lufthansa needs to be an active participator in consolidation, not just